Welcome to the new Becker-Posner Blog, maintained by the University of Chicago Law School.

04/09/2006

Should Lobbying and Campaign Spending Be Further Curtailed? Posner

In the wake of the Jack Abramoff scandal, measures are under consideration in Congress to restrict lobbying more than at present by requiring more lobbyists to register (and thus provide more information on lobbying activities to the interested public), by requiring more public disclosure of existing lobbyists‚Äô activities, and by forbidding lobbyists to buy meals for members of Congress. Citizens‚Äô groups want much tighter restrictions on lobbying than anything Congress is contemplating, arguing that lobbying skews government policy. Extensive restrictions have been placed on contributions to political campaigns, which are analogous to lobbying. Republicans, who used to oppose efforts to restrict campaign contributions by PACs (political action committees), are now seeking to place restrictions on a type of PAC called a ‚Äú527,‚Äù which can accept unlimited contributions to engage in political advocacy, provided the 527 avoids supporting a candidate explicitly. The Democrats, who were in the forefront of advocating limits on PACs, are opposing limits on 527s, which are primarily liberal.
Lobbyists provide information to members of Congress and other officials, and campaign contributions are used to sponsor political advertising, efforts to register voters thought likely to support the candidate on whose behalf the efforts are made, and other political activities, most of which are broadly informational in the sense of seeking to familiarize the electorate with the candidate and his program. Hence restricting lobbying and campaign contributions is likely to reduce the flow of information to government officials and to voters, and this might seem a substantial interference with the political marketplace.
The main concerns about lobbying and campaign contributions are first that they are wasteful and second that they are a form of quasi-bribery and distort legislation and policy. They are indeed wasteful in an arms-race sense: if one candidate (or industry) spends heavily on advertising, his competitors have to do likewise lest they be drowned out; the incremental information furnished the official or the voter may be slight. This is less of a problem with lobbying than with campaign contributions. Members of Congress and their staffs are spread very thin and would find it difficult to function without the information provided by lobbyists. Most voters, in contrast, have very little interest in political information, even in hard-fought presidential campaigns, in part because they know that their vote isn't going to swing the election.
As for the distorting effect of lobbying on policy, it probably is slight. Of course there are many examples of special-interest legislation that reduce overall social welfare, but there would be much special-interest legislation without any lobbying, since in a democratic society legislators have to be attentive to the preferences of influential constituents. Much such legislation is, moreover, quite inconsequential from an overall social-welfare standpoint. Liberal activists denounce "corporate subsidies," many of which consist simply of tax breaks. The usual effect of giving a tax break is merely to shift the incidence of taxation--if one taxpayer pays less in taxes, another will pay more--with uncertain and perhaps often trivial effects on resource allocation. Most economists consider taxation of corporations inefficient because its effect is to tax investors twice, so tax breaks for corporations probably increase social welfare.
The aggregate effects of lobbying, moreover, may be rather trivial. This is suggested by the fact that annual expenses on lobbying Congress are only about $1.5 billion, even though the total federal budget is more than $2.5 trillion, and the regulatory powers of Congress place much of our $12 trillion economy under congressional sway as well. There are two possible inferences to be drawn from the disparity between the amount spent on lobbying and the total economic rents that Congress could confer on lobbyists' clients. One is that the marginal cost of influencing a member of Congress by a given amount rises very steeply. Perhaps the first nice meal you buy him increases by .001 the probability of his supporting your pet rent-seeking project but you would have to buy him 10 nice meals to increase the probability of his supporting you by another .001, and so on. The second and complementary possibility is that most members of Congress are not bribable, and that all that most lobbyists get for their efforts is access that enables them to furnish information useful to the member. There is (returning to the previous point) only so much that one can spend on generating information; moreover, and because information is relatively cheap to obtain and communicate to a small number of people, even relatively unorganized and impecunious groups who oppose a proposed project can provide offsetting information to the members of Congress. The lobbying market should therefore be competitive.
Campaign financing presents graver issues than lobbying does because a member of Congress cannot be reelected unless he spends a substantial amount of money on his campaign, and the people who contribute that money, many of them anyway, expect something in return. Even so, the effect can be exaggerated. If both parties have roughly equal levels of financial support, a candidate doesn't have to change his political stripes in order to raise money; and donors who share his political views will not be asking him for something he doesn't want to give them.
In the 2004 presidential and congressional elections, total campaign expenditures were approximately $3 billion, a figure that reformers consider shockingly high. It is actually low relative to the stakes in choosing a President and a Congress; it is four one-thousands of the GDP.
I am not a Pollyanna when it comes to evaluating the U.S. government. I believe that it may well be quite incompetent to deal with the problems that the nation is facing in an era of profound global political insecurity interacting with the breakneck pace of technological change. But government incompetence is better illustrated by the congressional reaction to the Abramoff scandal than by Congress's failure to enact "meaningful" campaign and lobbying reforms. An intelligent legislature, learning of a scandal, would first want to determine the likely frequency and consequences of such scandals and the adequacy of existing law to limit their recurrence. This inquiry would quickly reveal that Abramoff had pleaded guilty to criminal activity along with two congressional aides, that other members of Congress were under criminal investigation, and that an immensely powerful member (Tom DeLay) had been forced by the scandal to resign from Congress. The inquiry would further reveal that the scandal was actually an artifact of a surpassingly foolish law, namely the Indian casino law, which by conferring enormous rents randomly on Indian tribes had generated rampant rent-seeking, frequently shading into bribery. (Becker and I blogged about the law on January 9 of this year.) What the inquiry would not reveal would be a good reason for amending the lobbying laws.

Comments

You can follow this conversation by subscribing to the comment feed for this post.

A. Scott, You'd better take a real close look at the tax rebates and other incentives that Toyota got for siting that plant. You'll find them hidden away in the various "boiler plate" paragraphs. I think you'll find that the incentives are worth much more than that $200 mil. donation.

Imagine a world where we held politicians to the same ethical standards that we hold judges. Would not 90% of these problems instantly disappear? I think most of us are so cynical about politics that we find it difficult to even imagine a meaty ethics code for elected representatives. But why not? Don't the people deserve better?

Whether the public is paying attention or not is not the question. The question is should one be able to spend money to advocate one?s political position. We may want to get rid of politicians who take lobbyist's cash, conversely, we might like the lobbyist and think our guy is a good guy for taking it. Our government may seems stable, but, Charles I seemed to have a good grip on things too.

In the years after Charles I, guys buttonholed members of parliament as they passed through the lobby heading into the chamber. The views of the voters were expressed to the representatives in the lobby by people hired to voice these views. Lobbying is as old as the republic; without it we might not be a republic.

Cholesterol,
Whether the public is paying attention is directly on point: the proposed reforms aim to provide the public more information. Greater reporting requirements to the public is a solution if one believes the public is paying attention. If the public is not paying attention, then it does not matter that more information is available. My criticism directly addresses the relevant question, which is precisely why you responded to it in the first place. Having proven yourself unable to rebut this criticism, you are now taking another crack at it, one that is entirely beside the point. Nor is the "question" you raise up for dispute without amending the constitution. You say "The question is should one be able to spend money to advocate one?s political position." While that might be a question in the halcyon England of Charles I, it is a constitutional right in the present day United States of America under our First Amendment, which, unlike, the unwritten constitution of Britain, forbids prior restraints and permits petitioning the government and freedom of the press. If you think petitioning the government and running a press were costless when the Constitution was ratified, then perhaps you should not be posting on an economics-related blog; the incontrovertible fact is "free speech" must always be paid for. Outlawing the funding of speech would negate the First Amendment. That is not, as you put it, a question: it is an absurd intrepretation of our fundamental law.

It is obvious you do not know what you are talking about. You use big words, but you don?t know what they mean. You lecture me about the "halcyon England of Charles I." Yes, it was calm and peaceful; tranquil, prosperous; a veritable golden time. Until you factor in the years of financial mismanagement and ruinous taxation which lead to the destruction of the agricultural section; the exercise of monopoly power which devastated the nation?s trade and the destruction of the parliamentary democracy. Toss in a bloody five-year civil war accompanied by starvation and plague and cap it off with a genocidal religious dictatorship and you have what one economist memorably described as , "continual fear and danger of violent death; and the life of man, solitary, poor, nasty, brutish, and short." Halcyon days indeed.

The topic is, "Should Lobbying and Campaign Spending Be Further Curtailed?" No, it should not. Lobbying and Campaign Spending are core political speech. In a free society I should have the right to spend as much of my money to advocate the ideas I believe in as I want. Charles I ran into problems when he choose to try and prevent his subjects from exercising those rights which were later included in the First Amendment; as our government attempts to clamp down on free speech, it runs the same risks.

As for transparency, does it matter that the public is paying attention? No. What matters it that they have the ability to pay attention should they choose to do so. Additionally, your thesis might not be correct. I have read that there is a certain lobbyist about which people are paying a great deal of attention.

You make two errors, both of which stem from your inability to make relevant distinctions.

1. The literal/figurative distinction. I know you dislike "big" words, but let me define two that are relevant to your dunderheaded criticism of my usage of "halcyon":

a. SARCASM n. 1. A cutting, often ironic remark intended to wound.
b. IRONY n. 1. The use of words to express something different from and often opposite to their literal meaning.

You have not proven that I do not know what "halcyon" means. By contrast, you have proven at least two things: 1. that you cannot recognize a sarcastic tone, even when someone calls you "Cholesterol"; and 2. that your intrepretation of what is the relevant question AND your interpretation of my post are incoherent. It should have been clear to anyone who read the entirety of my post that I was admonishing Britain for lacking a written constitution and permitting prior restraints on speech. Clearly, I do not find either fault to be literally halcyon, yet I used the word. A reasonable interpreter would have taken into account my tone and made a simple inference: that I was rightfully mocking you and your crude framing of the issue.

2. The "Anecdote vs. Scientifically Derived Generalization" distinction. We are discussing here lobbying that will be affected by the proposed reforms. Since the reforms are premised on increasing the quantity of information dispersed to the public, it is relevant whether whether the public will pay attention once those reforms are enacted. If not, the reforms will have no effect at a cost. Paying something for nothing is called waste.

Your appeal to Jack A. is absurd. Jack A. is not a Congressman whose behavior has been outed due to the proposed lobbying reforms under discussion here. Either you are a hypocrite or this literal-minded approach should end the debate.

Let's suppose you are a hypocrite and you refuse to die down. Even if we assumed for sake of argument that Jack A. was a Senator or Representative, your appeal to Jack A. is like arguing that because O.J. killed Nicole with a knife and the general public paid attention, everyone will pay attention to every crime involving a knife that is weekly printed in the local gazette's crime blotter. Most people who care deeply about the environment do not check the E.P.A.'s website for updated reports that agency is mandated by law to generate; no newspapers report regular reporting by government agencies unless there is the smell of a big story accompanying it. There is no reason to believe that the press or the the public in general will take advantage of these enhanced reporting requirements, so the mandating of them is a waste of resources, including federal tax dollars, paper, and time. As anyone who has taken an economics course knows, there is reason to believe that the proposed reforms will cause legislators and lobbyists to shift their behavior in a way that avoids detection by whatever means essential to generating the reports, i.e., if you announce that you'll dust for fingerprints, then I'll wear gloves; if you announce a ban on soft money, I'll use 527s.

What's more, many of the early alarums concerning Jack A. have turned out to be flatly false; dozens of Congressmen are not confessing fault and leaving office as a result of his deal-brokering; the "scandal" more and more appears to be a press overreaction; and public interest in the story has actually waned by the day.

If anything, the Jack A. story suggests the exact opposite of what you would like it to definitely prove. It doesn't undermine my "thesis," it is either irrelevant to it or it bolsters it.

Collestro: In a free society I should have the right to spend as much of my money to advocate the ideas I believe in as I want.

. I disagree with this formulation. Even if I believe that women should murder their husbands, I cannot set up a fund to pay for that. One gets into tricky issues with foreign billionaires funding the legalization of drugs and prostitution, or other crimes, over the preferences of the majority.

Your resort to an ad homimun attack shows the weakness of your position, although you really don't seem to have a position. I think that "reform" is a bad idea. I think that giving money to people who think as I do is a core, or inalienable, right. I think that limiting my right to give money is limiting my right to speak. Governments which limit speech do not do well, in the long term.

The answer to problematic speech is; more speech. One way to do that is to publish who gets what and from whom. The proposed "reforms" are attempts to limit speech, they are not efforts to increase transparency. My notion is that we should not be putting limits on how much one can give, but allow unlimited giving. An election is very much like a market and I tend to think that free markets are better.

The last point which you miss is the effect of Abramoff. I don't think you, or anyone, knows how he will play out in the election. I have seen challengers gaining traction against incumbents tied to Abramoff. I read that a formally invincible senatorial candidate down in Florida, Katherine Harris, is getting clobbered, partly because she took Abramoff money. Not until the ballots are counted will we have a fix on Abramoff.

Of course, I believe that the remedy to bad speech is more speech. I don't think that you are correct in your position that we are better off with a written constitution. We do not seem to be following it and England while slightly behind, did have a three-hundred year head start.

John,

Even if I believe that women should murder their husbands, I cannot set up a fund to pay for that. Correct, but I should be able to run an ad in the Times advocating my position. Speech is not action.

Cholesterol: "My notion is that we should not be putting limits on how much one can give, but allow unlimited giving. An election is very much like a market and I tend to think that free markets are better."

1. Hmm, we never argued about this, so this point either mischaracterizes my argument, or is just irrelevant. Nor did I resort to an ad hominem; it simply accompanied and is independent of my argument.
2. The notion that markets are "free" is meaningless rhetoric.
3. The reforms propose to increase reporting requirements, not to directly limit expenditures. As I pointed out before, directly limiting expenditures would clearly be prohibited by the First Amendment. It is not the case that such would necessarily be prohibited by the unwritten Constitution of Britain. You cannot have it both ways. So, unless your position is inconsistent, it is you who has no coherent position.

Collestro,
You say that you should be able to run an ad in the Times advocating your position. What if Bill Gates gives 2 billion each to the Republican and the Democrat nominees. No problem then? Is that a free market? Is that what the Founders sought to protect...Microsoft's monopoly? I do not understand your position. Free speech does not mean the absence of democracy.

Cholesterol: "The proposed "reforms" are attempts to limit speech, they are not efforts to increase transparency"

Posner: "In the wake of the Jack Abramoff scandal, measures are under consideration in Congress to restrict lobbying more than at present by requiring more lobbyists to register (and thus provide more information on lobbying activities to the interested public), by requiring more public disclosure of existing lobbyists‚Äô activities..."

that doesn't even make any sense!.
I am from Eritrea and learning to speak English, tell me right I wrote the following sentence: "Ads buy and sell items india home work fun video devices digital cameras automatic ifb front loaded washing machine, small refrigerator."

Greeting. It is not enough to aim; you must hit.
I am from Myanmar and learning to write in English, please tell me right I wrote the following sentence: "Can anyone tell me which is the best louis vuitton handbag to buy."